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US Crude Oil Technical Forecast: OPEC+ Sets up Major Trend Reversal

US Crude Oil Technical Forecast: OPEC+ Sets up Major Trend Reversal

Richard Snow, Analyst

US Crude Oil Technical Forecast: Bullish

  • OPEC+ output cuts provide catalyst for US crude bullish reversal
  • Oil price action accelerates higher, approaching significant support at $93
  • Technical posture lays the foundation for an longer-term bullish reversal with $93 and $100 remaining crucial to the outlook
Oil - US Crude Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% -14% -5%
Weekly -28% 65% -13%
What does it mean for price action?
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OPEC+ Output Cuts Provide Catalyst for US Crude Bullish Reversal

US crude oil has put in a rather remarkable move to the upside since printing the low on September the 26th, albeit with help from OPEC+ and sources referring to larger future output cuts.

Oil prices are up nearly 20% from the low, the largest advance since March earlier this year. The move has also surged above the June trendline and the 61.8% Fibonacci retracement of the 2021 to 2022 major move ($88.40). It is not surprising to see oil advance as much as it has, since the commodity has steadily sold-off for most of H2 and required a fundamental shift (OPEC+ cutting output by 2 million bpd from November) to jolt it higher once again.

The chart below highlights recent OPEC+ developments and the resulting price action. At the time of writing, crude oil approaches the $93 level as the next level of support which is significant as it was the pre-invasion price and subsequently halted price declines in H1 and throughout the majority of July. Thereafter, the 50% Fib level of $96.44 comes into focus along with late August high of $97.66.

With Friday’s price action looking likely to end the day higher, that would mark 5 consecutive days of rises without a pullback. The RSI and MACD reveal that the market still has a fair distance to travel before breaching overbought levels, with momentum to the upside gaining traction. The $88.40 level corresponding with the 61.8% Fib retracement offers a potential level of support if we are to witness a pullback.

US Crude Oil (CL1!) Daily Chart

image1.png

Source: TradingView, prepared by Richard Snow

The 4-hour chart actually reveals a bit of a pullback towards the June descending trendline before shooting higher after news of the OPEC+ output cuts. Therefore, price action over the short-term could very well continue to accelerate into the start of next week.

US Crude Oil (CL1!) 4-Hour Chart

image2.png

Source: TradingView, prepared by Richard Snow

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--- Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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